Saxo Bank lowers margin requirements on forex instruments

Saxo Bank lowers margin requirements on forex instruments

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Saxo Bank, a Danish bank specialized in providing online trading services, said on Thursday it has reduced to a minimum 1% the margin requirements for forex instruments, including spot, forwards and options. This means that the broker offers leverage of up to 100:1.

The new margin rates came into effect from 25 April, 2016. They vary from 1% to 4%, depending on the deposited amount traders have in their trading accounts. The margin will be progressively increase with the deposit growth. Details follow:

Amount traded (in USD)

<3 Million

From 3M to 25M​

From 25M to 50M

>50 Million​

Margin required

1%

​2%

​3%

​4%

Max leverage

100:1

50:1

33:1

25:1

The broker noted that margin requirements will be independent for each forex pair, instead being calculated fir the overall forex exposure.

Margin rates indicate the minimum amount clients need to have in their account balances when using leverage, a type of virtual borrowing traders can take from their broker. Leverage is a type of virtual borrowing traders get from their brokers. It allows investors to operate with higher amounts and to increase their profit, since they provide them with higher buying power, but it also presents higher risk.

In most countries, there are no legislative restrictions regarding how much leverage brokers can offer their clients. Usually, leverage of about 500:1 or up is considered quite high. Recently, the number of forex brokers that offer leverage on the higher end has been increasing. FxGlory and FBS are the only retail forex brokers to offer leverage as high as 3,000:1, while Exness recently became the first broker to offer unlimited leverage.

However, in some countries there are certain restrictions on leverage, mainly for retail trading. In the US, for instance, the leverage cap is 50:1, while in Poland it is 100:1. Meanwhile, in Turkey trading accounts with balance of less than TRY 20,000 cannot offer leverage rates of more than 50:1 for trading of gold and popular currency pairs such as the EUR/USD, USD/TRY, and EUR/TRY, and the maximum leverage for other pairs is 25:1. Leverage for popular pairs traded via accounts with more than TRY 20,000 is set at a maximum 100:1, while for other currency pairs the cap is 50:1.

Saxo Bank holds a banking license from Denmark’s Financial Supervisory Authority (FSA) and acts as a brokerage firm and a market maker, offering trading in more than 30,000 instruments, including forex, binary options, contracts for difference (CFDs), stocks, futures, and bonds.

The group operates through its subsidiary companies across Europe, Asia and the Middle East, Australia, South America, and South Africa.

Source: Saxo Bank

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